A Look Back at 2018 in Slovenia

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January 6, 2019

2018 was marked with several centenaries, WWI in particular, as well as two elections and the emergence of a new political star, a comedian turned politician, Marjan Šarec, who made a name for himself as an impersonator of various politicians, including the current opposition leader Janez Janša.

PyeongChang Winter Olympics

The year began with a pre-Olympic scandal. Biathlete Jakov Fak stepped down as a candidate for flagbearer at the PyeongChang Winter Olympics, because some were bothered by his Croatian origin. Fak then won a silver in the men's 20km individual biathlon competition and became the highest ranking Slovenian competitor at the Games. A second, bronze medal was won by Žan Košir in the parallel giant slalom.

Slovenian president Borut Pahor was also in PyeongChang. He cheered for Slovenian sportsmen and then visited the demilitarised zone between the two Koreas. He describes the situation at the border in the following words: “Sorry to say, but this is bizarre.”

Slovenian armed forces

Also in February, a NATO evaluation of the 72 brigade of the Slovenian army marked it as “combat not ready” in four out of five fields of scrutiny. The Chief of General Staff of the Slovenian armed forces was thus replaced with Alan Geder, who remained in office until November, when he was replaced by the first female chief of a NATO army, Major General Alenka Ermenc.

The first two months of 2018 were also marked by several major strikes in the public sector, with staff demanding that the remaining austerity measures be removed.

A second wave of public sector strikes forced the Minister of Public Administration, Boris Koprivnikar, to resign. The Secretary General of the Government, Lilijana Kozćovič, then took over as the chief government negotiator.

By March 12th it seemed that negotiations were coming to an end, when just a few hours later the proposed agreement is abandoned and another strike is confirmed for March 14th. On this same day Prime Minister Miro Cerar resigns from his post, although for different reasons.

Second track of the Divača-Koper railway and resignation of PM Cerar

“Today was the last straw” said Miro Cerar, who resigned as Prime Minister after the Supreme Court declared the second track referendum invalid due to a biased government campaign.

Although the infrastructure project does not really need a new law to commence, certain other claims of the government in relation to this project raised eyebrows, including one that insists on Hungary investing €200 million in the project, a 1/5 of the cost, which would give the Hungarian party a 49% share in the project’s 2TDK company.

Campaign

With Cerar gone, Pahor decided not to look for another Prime Minister but to set an early election date instead. Regular parliamentary elections were expected for June 10, and it was initially suggested that early elections would take place in the second half of May.

NSi (the former Christian Democrats) seize the opportunity for an eventual right-leaning coalition by replacing their party leader. Ljudmila Novak is thus replaced with Matej Tonin, hoping the latter will have more success in dealing with the SDS’ leader Janez Janša.

The SDS was believed to be financing its campaign using Hungarian money obtained via their media outlets such as Nova24TV and Demokracija. Janša was on the search for campaign resources himself, borrowing €450,000 from an alleged Bosnian businesswoman Dijana Đuđić, who is unable to show where the money came from.

Why did Janša not borrow the money from a Slovenian bank? “NLB laundered a billion euros for terrorists, if this is a more credible institution, I don't know where we live”, Janša answered.

Investigations

Several parliamentary investigations came to an end in 2018. One of them was that into the bank liquidity gap under the leadership of SDS Anže Logar. The results revealed suspicious to businesses in the Balkans and Russia, where the money seems to have disappeared without a trace. The commission indicted many of the bankers in charge at the time, who were unable to remember anything during interrogations.

Because the commission didn’t investigate money laundering in detail, another investigative commission was established, headed by Janko Moderndoerfer of the SMC party, which also investigates the problematic SDS loan. The commission found out that Iranian citizen Iraj Farrokhzadeh and his business with the NLB (Nova Ljubljanska Banka) was not a case of an individual doing business in Slovenia, but rather part of an Iranian state bank scheme to break through financial sanctions with the use of the Slovenian state-owned bank. The commission issued no indictment against those responsible at NLB, as their actions were “not criminal offences”. Unlike NLB, the investigation into NKBM (Nova Komunalna Banka Maribor) revealed strong suspicions of money laundering by Italian organised crime syndicates as well as Slovenian citizens, some of them even bank employees. One person indicted was Primož Britovšek, who joined the bank on the invitation of the board president Aleš Hauc as a deputy chief for money laundering and terrorism financing prevention although he proved to have no adequate knowledge for the post.

Meanwhile, the election campaigns formed around the migration crisis, problems on the border with Croatia, selling NLB, public sector strikes, corrupt bankers and a disintegrating health system.

The polls showed a high possibility of an SDS victory, although in the debates nobody seemed to be willing to join a coalition with the SDS leader Janez Janša, who eventually takes 24.96% of all the votes, far ahead of the runner up Marjan Šarec’ List 12.66%. President Borut Pahor does his job and first proposes Janša as the Prime Minister and coalition leader. Janša fails to gather the support of 46 votes in the 90-seat strong parliament to make the government operationally possible and steps back into the opposition, while Marjan Šarec forms a left-leaning minority government with a support of Levica (aka the Left), who decide to remain in the opposition. The coalition agreement includes raising the minimum wage and pensions, as well as lower taxation of labour, supplemented by higher capital gains tax.

In 2013 the then leader of the Slovenia, Alenka Bratušek, claimed to have saved the government from bankruptcy by promising to privatise NLB in return for state recapitalisation of the bank, which in the years 2011, 2012 and 2013 amounted to €2.2 billion, in addition to €2.3 billion of the bank’s bad debts that were transferred to The Banks Assets Management Company (BAMC), or the so-called “Bad Bank”.

In 2018 NLB (Nova Ljubljanska Banka, since 1994) lost two cases with regard to the Croatian savers in LB (Ljubljanska Banka, until 1994), an issue Slovenia wants to put in the context of other remaining issues that originate from the dissolution of Yugoslavia. However, the bank might now need to pay about €400 million to the Croatian savers, which is why before the elections the SDS tried to pass a constitutional law that would presumably protect the bank from having to make such payments.

A Croatian company from Umag extended its shellfish farm in the Bay of Piran, which Croatia continues to treat as part of its territory, while for Slovenia the arbitration decision on the disputed territories – which grants Slovenia most of the Bay – entered into force on January 2018. Slovenia wrote a protest letter to the European Commission, but no one seemed to take it seriously. Slovenia hence decided to file a lawsuit against Croatia for not following the arbitration agreement.

More problems in the health department

In February Aleš Šabeder took up leadership of the chaotic University Medical Centre in Ljubljana. Soon he faced mounting problems at the paediatric heart surgery department, where due to in-fighting there is a continual loss of surgeons. By the end of 2018 the health minister Milojka Kolar Celarc found an ad hoc solution by establishing a National Institute for Congenital Heart Disease, which would allow hiring foreign doctors on much higher pay than domestic ones, a move which now appears to be causing more problems than it solves.

The first surprises came with the first session of the new government. Ministers confirmed new state secretaries, among them Damir Črnčec, who became National Security Secretary in the Prime Minister’s cabinet. A former close colleague of Janez Janša, Črnčec is also known for his anti-immigration tweets, which compare refugees to cancer and call for their deportation. Šarec tries to calm the upset voices on the left by guarantees that if Črnčec continues to express such views he will have to go.

Work then begins, as Šarec first travels to Brussels, then to Berlin, and then meets with the head of NATO.

Minimum wage

The Left began pushing for a two-stage rise in the minimum wage, something that was part of the coalition agreement. Accordingly, the minimum wage would be raised from the existing €638 net to €667 in 2019 and to €700 in 2020.

Business representatives were unhappy with this, as well as with the proposed rise in corporate income tax, currently at a nominal 17% one of the lowest in Europe. Ivo Boscarol, the CEO of Pipistrel, a successful light-aircraft company that in earlier years was a regular recipient of state subsidies, denounced the proposal and threatened to move his company to Italy. Pipistrel, despite the less favourable tax environment across the border, in fact built a factory in Italy in 2012 so that its aircraft could be licenced for export to the United States.

Another successful businessman, Igor Akrapovič, joined the threats to take his business out of Slovenia and the positions of both men were supported by Sonja Šmuc, the executive director of the Slovenian Chamber of Commerce.

When Levica finally prepares a bill for a rise in the minimal wage in November, Ms Šmuc explained to the national broadcaster that the raise “wouldn’t make anyone satisfied but instead make a lot of dissatisfied people: someone who now receives €700 will then be seen as if they are on a minimum wage, and therefore we are creating a country of the wealthy poor.” She later claims that her statement was taken out of a context.

Medical achievements

While the new government faced a plethora of problems with a corrupt and dysfunctional health system, this did not seem to have affected the level of medical expertise. Dedicated teams of doctors and nurses at the University Medical Centre Ljubljana successfully carry out the first transplantation of both lungs in September, effectively establishing the lung transplantation programme in the Centre.

One month later there was another breakthrough in the field of plastic reconstructive surgery. A patient who lost her entire nose to cancer was provided with a new one, constructed from the patient’s own tissue, which grew on her arm for about a month before being successfully transplanted to her face.

NLB finally sold – cheaply

On November 14 NLB shares were finally listed on the London and Ljubljana Stock Exchanges. Alenka Bratušek thus fulfilled her promise to Brussels, but was unlikely to be satisfied with the price. The State sold its 59% share for a mere €608.6 million, much less than Slovenian taxpayers had invested in it.

On November 13, the new Minister of Cohesion and former mayor of Komen Marko Bandelli was forced to step down after sending an inappropriate message to the new mayoral candidate:: “I’ve been informed that you are running for mayor’s office. (…) If your campaign is all about fighting the neighbours, then you should know that no support will come from me. And you know yourself the importance of un-support from the two important departments such as cohesion, EU regional development funds and above all infrastructure.”

It is not the first time Bandelli doesn’t seem to understand the gravity of the matter. He had previously used the emergency blue lights on his official vehicle for no reason other than he was late, telling the media that he had the right to do so. This time he admitted his mistake, adding that he could redeem himself by doing a good job. Prime Minister Šarec had other reasons for wanting him gone, however, as Bandelli also failed to prepare a presentation for the Finance Minister on the situation with regard to drawing on EU funds. When the 5th of November deadline for this task had passed, Bandelli then asked to be given more time.

Pensions

The party leader Alenka Bratušek was surprisingly protective of Bandelli, although he still lost his job. She stated that she expects equal treatment by Prime Minister Šarec for all government officials, and at the same time seized the “opportunity” to strike back. She reminded Šarec to respect the coalition agreement and government commitment to raise pensions, or else...

Marjan Šarec’ comment on the demand by SAB (Stranka Alenke Bratušek) is that “to claim that only one coalition party cares for the pensioners is quite pretentious.” Was he worried that SAB was about to leave the governing coalition? “They didn’t show much of intention to leave.”

SAB stops pushing on this issue and proposes Iztok Purič as the new cohesion minister.

In the second half of November the SDS began its campaign against the UN pact on migration that would be signed at the UN conference on December 10-11 in Marrakech. The SDS claims that the agreement does not differentiate between legal and illegal migrations and demands an advisory referendum on whether or not Slovenia should join the agreement.

The temperature went up at an irregular parliamentary session on the matter, where we could hear everything from curses to orders to take a member out of the parliament.

At the local elections on November 18, citizens elected new mayors and local councillors. Ljubljana re-elected Zoran Jankovič, while another well-known mayor, Franc Kangler, lost his seat in Maribor to a challenger, Aleksander Saša Arsenovič.

In Koper the incumbent Boris Popovič lost to Aleš Bržan, with a mere seven vote difference. Popovič filed a series of complaints and when a mistake was discovered at one of the polling stations the difference went from seven to seventeen and Bržan became the new Mayor of Koper.

The end of strikes

At the beginning of December and after two months of negotiating the government and unions sign an agreement which will raise almost all salaries in the public sector.

Impeachment proposal against Prime Minister Šarec

On December 21 Janša's SDS and Jelinčič' SNS filed an impeachment proposal against Prime Minister Šarec due to his government's failure to secure full financing of private schools. The impeachment was not supported by the opposition NSi, and Šarec responded that while this particular attempt to remove him from office was not to be taken very seriously, it should serve as a reminder that there is an opposition in Slovenia and that it’s not going to sit around idly.

In 2018 Marjan Šarec also became a regular character impersonated on the Radio Ga-Ga show, where he began his career as one of the show’s performers.